Riyadh (TDI): Saudi Arabia’s Aramco, the world’s largest oil exporter, has warned of “catastrophic consequences” for global oil markets if the ongoing Iran war continues to disrupt shipping through the Strait of Hormuz.
Normally, around 20% of the world’s oil passes through this strategic waterway each day, but Iranian Revolutionary Guards have stated they will prevent “even one litre of oil” from leaving the Middle East if US and Israeli attacks persist.
Aramco CEO Amin Nasser said in an earnings call on Tuesday, “The longer the disruption continues, the more drastic the impact on the global economy. While we have faced interruptions before, this is by far the most severe crisis the region’s oil and gas industry has encountered.”
The shipping blockade is rippling across multiple industries. Aviation, agriculture, automotive, and insurance sectors are already feeling the strain, and further disruptions could spark broader economic fallout.
Brent crude, the global benchmark, surged to nearly $120 a barrel on Monday, a three-year high, before easing to around $92 on Tuesday after US President Donald Trump suggested the war could end soon. Trump also warned that Washington would respond with even stronger force if Iran continued to block oil exports, and mentioned the possibility of the US Navy escorting ships to ensure safe passage, though naval resources are partly tied up in active operations against Iran.
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Aramco confirmed that it is currently not exporting oil from Gulf ports due to the blockade. To keep supply flowing, the company is using the East-West pipeline to transport Arab Light and Arab Extra Light crude to the Red Sea port of Yanbu, which is expected to reach its full capacity of 7 million barrels per day soon. Some crude is also being redirected to meet domestic demand.
A minor fire at Aramco’s Ras Tanura refinery, triggered by last week’s drone attack, was quickly contained, and operations there are being gradually restored.
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Despite these challenges, Aramco continues to meet most customer needs. The company recently reported a 12% drop in annual profits, mainly due to lower crude prices, and announced its first-ever share buyback program, planning to repurchase up to $3 billion in stock.
